Intel Corporation

NASDAQ Global Select
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Bullish +75

Intel Climbs 15% on Apple Chip Deal as Trader Warns on Upcoming Cisco Earnings

📊 The AI sector is diverging into two distinct narratives, with Cisco positioned on near-term earnings and Intel re-rating based on long-term strategic shifts.

🚀 Intel shares surged 15% intraday following reports of a preliminary chip manufacturing agreement with Apple.

🔄 This potential deal marks a significant reversal from Apple's 2020 decision to transition away from Intel chips toward its own silicon.

📈 Intel stock has appreciated nearly 500% over the past year as investors reassess its foundry business and AI manufacturing potential.

💻 Cisco reported Q2 FY2026 revenue of $15.35 billion, with networking revenue up 21% year-over-year.

🤖 Cisco secured $2.1 billion in AI infrastructure orders from hyperscalers, reinforcing its role in the AI networking market.

⚠️ Options trader Oliver Rennick warned that implied volatility for Cisco is at a one-year high, suggesting over-pricing ahead of earnings.

📉 Cisco call volume exceeded put volume by more than four times, indicating aggressive bullish betting on another price rise.

📅 Cisco will report its actual earnings after the market close on Wednesday, May 13.

😟 Some shareholders expressed concern that Cisco's rally is becoming "queasy" due to expectations outpacing fundamentals.

🍎 Apple shares reached fresh all-time highs on news of the Intel deal and strong recent financial momentum.

📱 Apple reported a 22% growth in iPhone sales and 16% growth in services revenue in its latest results.

🔬 Apple is increasing R&D spending to approximately 10% of sales, signaling continued investment in future hardware and AI products.

🧠 Investors are now separating stocks driven by positioning momentum from those fundamentally repriced due to changed earnings power expectations.

🎯 Analysts suggest the next phase of the rally will depend on correctly distinguishing between these two categories of AI stocks.

📈 Recent market enthusiasm for Intel has included optimism surrounding NVIDIA Rubin systems and Google Xeon deployments.

Bullish Signals
  • Intel jumped 15% intraday following reports of a preliminary chip manufacturing agreement with Apple.
  • The stock has rallied more than 113% over the past month and nearly 500% in the past year as investors re-rate the company around its foundry business and AI manufacturing potential.
  • A potential relationship with Apple would mark a major reversal from Apple's previous transition away from Intel chips, signaling a significant positive shift in Intel's long-term position in the semiconductor ecosystem.
  • Recent enthusiasm extends to optimism surrounding NVIDIA Rubin systems and Google Xeon deployments within the broader Intel context.
  • Apple also traded higher on the news, reaching fresh all-time highs while demonstrating strong momentum with 22% iPhone sales growth and 16% services growth.
  • Apple's R&D spending is climbing to roughly 10% of sales, signaling aggressive investment into future hardware and AI product development.
Risk Factors
  • Options trader Oliver Rennick warns that implied volatility in Cisco is at its highest level in more than a year, suggesting the market is overpaying ahead of earnings.
  • Call volume for Cisco options is running more than four times the put volume, indicating an aggressive and potentially risky bullish bet ahead of Wednesday's May 13 earnings report.
  • A longtime Cisco shareholder expressed 'queasy' feelings about the stock rally, signaling growing concern that the market may have priced in too much positive news relative to actual fundamentals.
  • Intel jumped double digits on reports of a merely 'preliminary' manufacturing agreement with Apple, introducing significant execution and deal-completion risk to the stock's valuation.
  • Investors are still trying to figure out whether Intel has fundamentally changed, suggesting that the recent surge driven by AI optimism may not be fully supported by verified long-term earnings power.
  • The article highlights a split in the AI trade where momentum-driven positioning is being separated from fundamental repricing, creating market uncertainty and potential volatility.
Full Analysis
Intel shares surged approximately 15% on Wednesday amid reports of a preliminary manufacturing agreement with Apple, marking a significant potential reversal from the tech giant's decision in 2020 to stop producing chips for the iPhone maker. This deal suggests a shift in Intel's long-term position within the semiconductor ecosystem, driving the stock up more than 113% over the past month and nearly 500% in the last year as investors re-rate the company based on its foundry business and AI manufacturing capabilities. The news also sent Apple's stock price to fresh all-time highs following strong recent results that included 22% growth in iPhone sales and a rise in R&D spending to about 10% of sales, signaling continued aggressive investment in future hardware and AI development. Meanwhile, the broader AI trade landscape showed a distinct split between momentum-driven stocks and those facing elevated expectations. Cisco Systems reported strong Q2 FY2026 revenue of $15.35 billion with networking revenue up 21% year over year and AI infrastructure orders reaching $2.1 billion, but options trader Oliver Rennick warned that implied volatility for the upcoming earnings report on Wednesday, May 13, is the highest it has been in more than a year. He cautioned that investors are essentially paying up with calls ahead of earnings, comparable to "accelerating into the turn," noting that call volume was over four times higher than put volume despite some existing shareholders expressing concern over the current rally levels. The article highlights that Intel's rally is fundamentally different from Cisco's; while Cisco's momentum appears driven by positioning and near-perfect execution expectations on already strong fundamentals, Intel's valuation shift relies on a complete reassessment of its future earnings power due to a potential return as Apple's supplier for chip manufacturing. Market participants are increasingly recognizing that the next phase of the AI rally will depend on correctly separating stocks being driven by momentum from those undergoing a fundamental repricing of their value proposition in the semiconductor supply chain and artificial intelligence sectors.